Performance Management: How to balance employee expectations

The talent ecosystem has evolved significantly. Hence, organisations should continuously refine their performance management systems (PMS) to strike a balance between employee growth and business objectives. What worked a decade ago—annual performance reviews and rigid key result areas (KRAs)—no longer aligns with the modern workforce’s expectations. Instead, companies are shifting towards agile, real-time, and technology-driven performance management models.

To explore how HR leaders ensure employees are set up for success while maintaining organizational alignment, People Matters spoke to industry experts. Here are the key pillars defining an effective performance management system today. Watch the video here: 

Clarity on organisational goals and individual contributions

A well-defined common goal is the foundation of a successful performance strategy. For Indranil Choudhury, Group President & Group Head - Human Resources at UTI AMC, it is important for every employee, regardless of their role or level, to have a clear understanding of the company’s overarching objectives. He further adds that beyond awareness, they should know, how their contributions align with these goals and what specific short and long-term milestones they need to achieve.

Without this clarity, employees may find themselves lost in a maze of KRAs that dilute focus and productivity. Performance measurement should be precise and purpose-driven, ensuring employees can work towards meaningful and achievable objectives rather than navigating through excessively complex performance indicators.

A shift from managing people to motivating performance

One of the biggest mindset shifts HR leaders must embrace is this: Are they managing people or motivating performance?

“The traditional approach of ranking employees through bell curves and static job descriptions is losing relevance. Today’s workforce thrives on personalisation and flexibility—just like how e-commerce platforms curate individual consumer experiences, employees expect tailored career pathways,” explains Soonu Wadewala, Head of HR, Axis Securities.

To build a high-performance culture, organisations must:

• Encourage individual growth through experience-based projects and structured learning.Foster a feedback-rich environment where feedback flows naturally, instead of being reserved for formal reviews.
• Use AI-driven insights to support performance coaching and decision-making.

How to be a Future-Ready PMS

Embrace Technology – Use AI and data analytics to make performance evaluation objective and dynamic.

Prioritise Continuous Feedback – Move away from annual reviews and foster regular coaching conversations.

Adopt an Agile PMS – Ensure goals and performance metrics remain adaptable to changing business landscapes.

In an era where multi-generational workforces demand instant recognition, flexibility, and meaningful growth, organisations that evolve their performance management strategies will emerge as industry leaders—driving both business success and employee fulfillment.